Intel Media comes out of the shadows with a few teasers

Hardware, content, and other things over IP this year

Intel today is unveiling a few teasers about their content delivery and media business, mainly the name Intel Media. Other than that, details are few and far between, but we can shed a bit of light on some pieces.

Intel Media is effectively the replacement for the old DHG, Digitial Home Group. You might remember them from such hits as Intel Google TV and other expensive but painfully public flops. DHG was put out of our misery in a reorg a couple of years ago, and the new organization seems to have learned from those mistakes. While we won’t make any definitive statements until we have a much clearer picture of the product offerings and underlying tech, this one seems to be the first Intel content related offering that has a chance to succeed.

The biggest change in this V2.0, more likely V8 or V9, is that it is being run by people with a content background, not the technologists. Normally this makes us cringe, but lets face it, dealing with the MAFIAA has more to do with placating ignorant lawyers than doing the right thing, users be damned. Technologists tend to stuff this up by putting alien ideas like logic, sanity, fairness, and usability in to the products, things that don’t fly among the RIAA and MPAA set.

Knowing how to navigate those waters is key to getting stuff on your box, and lets face it, that is what people buy. Once you have those deals signed, you can assign the technologists the task of making it functional, secure, and profitable. With that in mind, it looks like Intel is getting far closer to the goal of making a media box that people actually want this time around.

News about the device and service is pretty slim right now, about all that has been revealed is that the box is Atom based, is not a PC from a user perspective, and runs over IP networks. It will have both programmed and PPV content, plus the nebulous ‘other services’. AppUp store anyone? You too can get Angry Birds on your Intel media-thingy now, plus seven or eight other top 50 Android Apps from 2010. Until specifics are given out later this year as we approach the launch, that about sums up what we know.

This brings up a few serious questions that Intel may need to answer. First up, the market they are entering is fairly crowded. Cable providers are there now as well as Microsoft with their XBox services, Sony with their Playstation, Apple’s iTunes, Amazon, Netflix, and many many more. Most offer a large enough portion of what Intel have to be considered a functional equivalent. This means Intel has an uphill battle on it’s hands in many ways, but that is not the actual problem.

Intel Media may sell lots of low margin devices, possibly subsidized by future content sales potential. Where the real money is likely to be made is on the back end, content needs servers to, well serve it up. That means lots of high margin Xeon sales in order to sling that data all over and keep everything running smoothly. This is a good thing for Intel no matter who deploys those servers, be it internal or the competition.

That is the problem, the competition, Apple, Amazon, Netflix, and the rest buy lots and lots of server CPUs from Intel. In fact, megadatacenters like Amazon runs are some of the most profitable clients Intel has period. Apple is likely the number one laptop seller, with Intel Inside, too, plus a handful of other devices for good measure. All these competitors are very lucrative customers indeed.

Now Intel is potentially competing with them. It all comes down to what the offering is, will it be an Intel service, an end to end solution from server to set top box, or just the box itself with some middleware thrown in? How this plays out could very well determine the views that these very lucrative customers have of Intel server products for their back ends. Once these customers start asking, “If Intel is attacking our content business, why are we funding their high margin server sales with our back end choices?” Intel is on dangerous ground.

Hopefully this question has been asked internally and the customers who might see this move as competition are briefed, their fears allayed, and some agreement has been reached as to boundaries and limits. If not, things could get ugly when Intel starts rolling out this new offering. The last thing Intel wants is customers to add to data center ROI calculations is how much Amazon gives the Intel Media hardware subsidy pool with every server sold. At that point, ARM, AMD, Tilera, and the rest become some much more attractive as server vendors.

As we said earlier, we do have hope for this one, or at least our most pessimistic view is that is has a chance. Earlier efforts were correctly written off within minutes for what turned out to be correct reasons. Intel Media seems to have learned from those missteps and is not making them again. Until the offerings are fully public, all we can really say is that it looks like a decent start.S|A

Updated: 5:10pm February 12, 2013 with correction to name. Intel Media is the name of the division, not Intel Digital.

Charlie Demerjian is the founder of Stone Arch Networking Services and SemiAccurate.com. SemiAccurate.com is a technology news site; addressing hardware design, software selection, customization, securing and maintenance, with over one million views per month. He is a technologist and analyst specializing in semiconductors, system and network architecture. As head writer of SemiAccurate.com, he regularly advises writers, analysts, and industry executives on technical matters and long lead industry trends. Charlie is also a council member with Gerson Lehman Group. FullyAccurate

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Charlie Demerjian is the founder of Stone Arch Networking Services and S|A. SemiAccurate.com is a technology news site; addressing hardware design, software selection, customization, security and maintenance, with over one million views per month. He is a technologist and analyst specializing in semiconductors, system and network architecture.

As head writer of SemiAccurate.com, he regularly advises writers, analysts, and industry executives on technical matters and long lead industry trends. Charlie is also a council member with Gerson Lehman Group.

Thomas Ryan is a freelance technology writer and photographer from Seattle, living in Austin. You can find his work on SemiAccurate and PCWorld. He has a BA in Geography from the University of Washington with a minor in Urban Design and Planning and specializes in geospatial data science. If you have a hardware performance question or an interesting data set Thomas has you covered.